JPMorgan Wins Dismissal of Madoff Investors’ U.S. Lawsuit
New York, May 18, 2016 – In a class action suit brought by Richard Friedman and Carla Hirschorn on behalf of investors in Bernard L. Madoff’s Ponzi scheme, alleging that the U.S. bank JPMorgan Chase & co. played an active role in Madoff’s Ponzi scheme and ignored red flags of his fraud, the Court held in favor of bank.
The Honorable U.S. District Judge John G. Koeltl in Manhattan held that the plaintiffs failed to show that JPMorgan had specific control over Madoff’s fraud and the allegations only suggested that JPMorgan and its employees were negligent, not fraudulent in dealing with Madoff. Judge Koeltl also dismissed several state law claims, saying they were preempted by federal law.
The lawsuit was brought on behalf of an estimated 2,500 net winners who withdrew more money from their accounts at Bernard L. Madoff Investment Securities LLC than they invested. They sought to hold JPMorgan liable for failing to end its relationship with Madoff although it knew or should have known his business was a fraud, and failing to report suspicious activity to the U.S. Securities and Exchange Commission.
The JPMorgan lawsuit began in March 2014, after the bank agreed to pay $2.6 billion to settle other Madoff litigation.
The case is Friedman et al v. JPMorgan Chase & Co et al, U.S. District Court, Southern District of New York, No. 15-05899.
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